Sentiment-filled economic data last week revealed US Retail Sales (Dec.) contracted at – 5.8% yoy (vs forecast -4.1%, vs previous -5.7%) while Existing Home Sales (Dec.) came in higher than expected at 4.02 mn (vs forecast 3.96 mn, vs previous 4.08 mn). This combination of economic data points to the economic slowdown & declining purchasing power, leading the Fed to conclude a soft landing, which could justify a 25bps Fed rate hike initially scheduled for Wednesday evening. China’s stock market will reopen today after a week of the Lunar New Year holiday, which will surely bring more color to the global financial market; while Germany’s 4Q22 GDP data, which will be released later in the afternoon with forecast at 0.8%, contracted from the previous period at 1.2%. This week, market participants will also be monitoring important macroeconomic data: the Eurozone 4Q22 GDP; as well as the European Central Bank (ECB) & Bank of England (BOE) meeting results, which are expected to raise the benchmark interest rates by 50bps, respectively.
Corporate News
Reliance Finance Will Repay IDR100 Billion in Bonds. PT Usaha Pembiayaan Reliance Indonesia or Reliance Finance will repay Series A Bonds worth IDR100 billion. The bonds are part of Reliance Finance’s securities issued in 2022, where the repayment will mature on February 19, 2023/ The bonds are including Series A Bonds, with an interest rate of 8% and a tenor of 370 days. Additionally, the source of funds for the repayment comes from the Company’s planned Internal Cash. (Warta Ekonomi)
Domestic Issue
Demand for Government Bonds (SUN) is expected to remain busy ahead of the Fed meeting this week. As is known, the government will conduct another SUN auction to meet part of the financing target in the 2023 State Budget. The nearest auction will be held on Tuesday; while the FOMC Meeting will be held on Jan 31-Feb 1, 2023. The predicted high demand for SUN has been reflected in the results of the auction on January 17, 2023, where the bidding reached IDR 59 trillion and the government managed to absorb IDR 23 trillion. (KONTAN)
Recommendation
ID10YT yield is detected trying to break the upper channel resistance of the downtrend, thus surpassing MA20 Resistance & previous High level of 6.81 paving the way to TARGET: yield 6.87 / 7.00 / 7.05. ADVISE: Average Up accordingly if the break out is confirmed. Meanwhile, the US10YT yield is detected still waiting for the right moment to break the Neckline of the bullish reversal Inverted Head & Shoulders pattern at 3.56; which will open the way to TARGET: 3.58 / 3.7 / 3.79. ADVISE: Buy On Break, or Average Up accordingly.
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